“The bad news for global economies is stacking up much faster than most economists thought, so trying to keep up is exhausting,” Kevin Giddis, head of fixed income capital markets at Raymond James, wrote in a report.

The S&P 500 fell 85.72 points, or 2.9%, to 2,840.60.

The Dow sank 800.49 points, or 3%, to 25,479.42.

The Nasdaq composite lost 242.42 points, or 3%, to 7,773.94.

The Russell 2000 index of smaller company stocks slid 43.05 points, or 2.8%, to 1,467.52.

The losses come a day after stocks rallied when the Trump administration delayed tariffs on about 160 billion US dollars in Chinese goods that were set to take effect on September 1.

President Donald Trump took to Twitter to defend his trade policy Wednesday, saying: “We are winning big time, against China.”

But many on Wall Street remain worried that the trade war between the world’s two largest economies may drag on through the 2020 US election and cause more economic damage.

“We still see a substantial risk that the trade dispute will escalate further,” said Mark Haefele, global chief investment officer at investment bank UBS in a note to clients.

Mr Trump also criticised the Federal Reserve for hamstringing the US economy by raising rates “too much & too fast” last year and not reversing its policy aggressively enough — the Fed cut its key rate by a quarter point last month.